
The Biden administration on Monday proposed a new framework that levies restrictions on the export of the advanced computer chips used to develop artificial intelligence, which industry executives say would limit access to existing chips used for video games and restrict in 120 countries — including Israel — the chips used for data centers and AI products.
Local sources The Times of Israel has spoken to and others that were quoted by the Calcalist newspaper on Monday said the framework, which is an attempt to balance US national security concerns about the technology with the economic interests of producers and other countries, could prevent Israel from competing in the global AI race.
- “What it means in practice is that it will be hard for Israeli companies to create and train new AI models because we don’t have the computing power,” Adv. Eli Greenbaum, a partner at the Arnon-Tadmor Levy law firm, which specializes in technology cross-border deals, told The Times of Israel.
Local industry experts raised concerns that the new restrictions will make it much harder for Israel to keep up the AI pace, as the US with the new regulation is essentially choosing the winners and the losers of the AI revolution.
- It could also deter global tech companies from building large computing centers and executing big AI projects in Israel.
- “If it is harder for Israeli companies to build new AI models, maybe those companies won’t be set up in Israel, for example when they think about where to start a company, they might decide to do it in the US instead,” Greenbaum said.
Israel ranks among the top 10 ecosystems for AI, but it is far from unlocking the full potential of the revolutionary technology as competition in the global AI race intensifies. Over the past year, industry leaders and tech entrepreneurs have raised concerns that Israel is missing the AI wave and needs to implement a long-term strategy to allocate money and resources to boost education and academic research, encourage startups, and provide the infrastructure and computational power needed to run AI models.
- Israel is among 15 countries in the “second-tier” category, along with Mexico, Portugal and Switzerland, which under the framework would be able to import AI chips from the US but with strict limits on computing power.
According to the new restrictions, there would also be a “bureaucratic” approval process to import AI processors or processors with AI capabilities such as graphics processors for gamers that are sold by US companies to Israel. In practice, the export of every advanced processor being sold by US chip giants such as Nvidia or Intel that is being used for AI development would need to get separate approval by the US regulator.
“It will create a huge bottleneck at the US Commerce Department because you don’t only have Israel but many countries on that list,” the sources said.
- “Limiting the country’s computing power is a major blow,” the sources were quoted as saying.
- “These technologies are already embedded in millions of computers today.”
Assuming US President-elect Donald Trump moves forward with the framework when he takes office, 25 “third-tier” countries already under US arms embargoes, including China, Russia, Iran and North Korea, would be completely prohibited from importing AI processors.
US Commerce Secretary Gina Raimondo said on a call with reporters previewing the framework that it was “critical” to preserve America’s leadership in AI and the development of AI-related computer chips. The fast-evolving AI technology enables computers to produce novels, make scientific research breakthroughs, automate driving and foster a range of other transformations that could reshape economies and warfare.
- “As AI becomes more powerful, the risks to our national security become even more intense,” Raimondo said.
- The framework “is designed to safeguard the most advanced AI technology and ensure that it stays out of the hands of our foreign adversaries but also enables the broad diffusion and sharing of the benefits with partner countries.”
White House National Security Adviser Jake Sullivan stressed that the framework would ensure that the most cutting-edge aspects of AI would be developed within the United States and with its closest allies, instead of possibly getting offshored like the battery and renewable energy sectors.
A tech industry group, the Information Technology Industry Council, warned Raimondo in a letter last week that a hastily implemented new rule from the Democratic administration could fragment global supply chains and put US companies at a disadvantage.
- “While we share the US government’s commitment to national and economic security, the rule’s potential risks to US global leadership in AI cannot be emphasized enough,” Naomi Wilson, the group’s senior vice president for Asia and global trade policy, said in a statement calling for a more extensive consultation with the tech industry.
One industry executive, who is familiar with the framework and insisted on anonymity to discuss it, said the proposed restrictions would limit access to chips already used for video games, despite claims made otherwise by the government. The executive said it would also limit which companies could build data centers abroad.
Because the framework includes a 120-day comment period, the incoming Trump administration could ultimately determine the rules for the sales abroad of advanced computer chips. This sets up a scenario in which Trump will have to balance economic interests with the need to keep the United States and its allies safe.
Government officials said they felt the need to act quickly in hopes of preserving what is perceived to be America’s six- to 18-month advantage on AI over rivals such as China, a head start that could easily erode if competitors were able to stockpile the chips and make further gains.
Ned Finkle, vice president of external affairs at Nvidia, said in a statement that the prior Trump administration had helped create the foundation for AI’s development and that the proposed framework would hurt innovation without achieving the stated national security goals.
- “While cloaked in the guise of an ‘anti-China’ measure, these rules would do nothing to enhance US security,” he said.
- “The new rules would control technology worldwide, including technology that is already widely available in mainstream gaming PCs and consumer hardware.”
Under the framework, roughly 20 key allies and partners would face no restrictions on accessing chips, but other countries would face caps on the chips they could import, according to a fact sheet provided by the White House.
The allies without restrictions include Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, the Republic of Korea, Spain, Sweden, Taiwan, and the United Kingdom.
- Users outside of these close allies could purchase up to 50,000 graphics processing units per country. There would also be government-to-government deals that could bump up the cap to 100,000 if their renewable energy and technological security goals are aligned with the United States.
Institutions in certain countries could also apply for a legal status that would let them purchase up to 320,000 advanced graphics processing units over two years. Still, there would be limits as to how much AI computational capacity could be placed abroad by companies and other institutions.
Also, computer chip orders equivalent to 1,700 advanced graphics processing units would not need a license to import or count against the national chip cap, among the other standards set by the framework. The exception for the 1,700 graphics processing units would likely help to meet the orders for universities and medical institutions, as opposed to data centers.
Microsoft, on a spree of building new AI-driven data centers around the world, said it would be able to comply with the new policy.
“We’re confident we can comply fully with this rule’s high-security standards and meet the technology needs of countries and customers around the world that rely on us,” said Brad Smith, Microsoft’s president, in a statement Monday.
- Times of Israel staff contributed to this report.
Source: TOI